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Being a Foreigner Among Domestic Banks: Asset or Liability?

Author/Editor: Claessens, Stijn | van Horen, Neeltje
Authorized for Distribution: December 1, 2009
Electronic Access: Free Full Text (PDF file size is 1,061KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Studying a large number of banks in various countries between 1999 and 2006, we document that foreign banks perform better when from a high income country, when host country competition is limited, and when they are large and rely more on deposits for funding. Foreign banks' performance improves over time, possibly as they adapt, and is better when the home country is geographical or cultural (but not institutional) close to the host country. These findings show the importance of controlling for heterogeneity among foreign banks and help reconcile some contradictory results found in the literature on foreign banks' performance.
 
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Series: Working Paper No. 09/273
Subject(s): Bank soundness | Banking sector | Commercial banks | Cross country analysis | Foreign direct investment | International banking | Profit margins | Time series
Author's keyword(s): Foreign direct investment; international banking; performance; distance
 
English  
    Published:   December 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009273   Pages:   35
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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